Hannah v. Washington County Assessor
| Decision Date | 25 May 2016 |
| Docket Number | TC-MD 150449N |
| Parties | RACHEL E. HANNAH, Plaintiff, v. WASHINGTON COUNTY ASSESSOR and DEPARTMENT OF REVENUE, State of Oregon, Defendants. |
| Court | Oregon Tax Court |
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT IN PART
ALLISON R. BOOMER MAGISTRATE
Plaintiff filed her Complaint on October 15, 2015, challenging Defendant Department of Revenue's (the Department) Disqualification Notice (Notice) dated July 27, 2015. The Department disqualified Plaintiff's property, identified as Account R565016 (subject property), from the Homestead Property Tax Deferral (Homestead Deferral) program. In its Notice, the Department stated that the grounds for disqualification were "Sold/Ch[anged] Owner". (Compl at 2.) In its Answer, the Department stated that: (1) the subject property is owned by an irrevocable trust and therefore does not meet the eligibility requirements provided in ORS 311.668(1)(c); and (2) the fact that the subject property is now owned by an irrevocable trust constitutes a change in ownership triggering disqualification of Plaintiff's account under ORS 311.684(2). (Def Department's Answer at 1.) During a case management conference, held on December 9, 2015, the parties agreed to file written arguments on the issue of whether the Department properly disqualified the subject property from property tax deferral pursuant to ORS 311.684(2) and ORS 311.668(1)(c).[1] The Department filed its Motion for Summary Judgment (Motion) and supporting exhibits on January 8, 2016. Plaintiff's Response was received on January 27 2016, and filed on February 1, 2016.
Plaintiff and her now deceased husband Ray Hannah jointly applied and were approved for Homestead Deferral in 1992. (Mot at 1.) In November 1994, Plaintiff and her husband conveyed the subject property by warranty deed to "Rachel E. Hannah, Ronald L. Belnap and Diane D. Badden, Trustees, or their successors in trust, under the Hannah Family Living Trust * * *." (Mot, Ex A at 1.) In 1996, the Department reviewed the trust document to confirm Homestead Deferral program eligibility and found that the eligibility requirements were met. (Mot at 1.)
At the Department's request, Plaintiff filed a Recertification of Eligibility on March 2, 2015. (Mot at 2, Ex B at 1.) The Department contacted Plaintiff to confirm that Ray Hannah was deceased and to obtain the trust document to confirm that the subject property still met the eligibility requirements for Homestead Deferral. (Mot at 2.) Plaintiff stated that her husband had died in 1999 and provided a copy of the trust document. (Id.) The Department provided the court with a portion of the trust document that states as follows:
Plaintiff states that no change of ownership has occurred. (Response at 1.) Plaintiff stated in her Recertification of Eligibility that she has continuously owned and lived at the subject property for 25 years. (Mot, Ex B.)
There are two issues before the court: (1) whether the subject property meets the eligibility requirements to receive property tax deferral under ORS 311.668(1)(c); and (2) whether a change of ownership has occurred requiring payment of deferred tax and interest under ORS 311.684(2).[2]
Summary judgment is proper where, construing the facts in the light most favorable to the adverse party, "there is no genuine issue as to any material fact" such that "the moving party is entitled to prevail as a matter of law." Tax Court Rule (TCR) 47 C. However, as the party seeking relief, Plaintiff bears the ultimate burden of proof and must establish her case by a "preponderance" of the evidence. ORS 305.427. A "[p]reponderance of the evidence means the greater weight of evidence, the more convincing evidence." Feves v. Dept. of Revenue, 4 OTR 302, 312 (1971).
The Department argues that the trust became irrevocable after the death of Ray Hannah in 1999, and therefore, the subject property no longer qualifies for Homestead Deferral. (Mot at 2.)
Oregon adopted the Uniform Trust Code (OUTC) in 2005. See Or Laws 2005, ch 348. Those sections are codified in ORS 130.001 to 130.910. ORS 130.505(1) () does not apply to trusts created before January 1, 2006. See Or Laws 2005, ch 348, § 47, compiled as note after ORS 130.505. Plaintiff's trust was created before 2005, thus the common law of trusts applies. See Hope Presbyterian Church of Rogue River v. Presbyterian Church, 352 Or. 668, 694, 291 P.3d 711 (2012). Under the common law of trusts, a trust "is irrevocable unless the settlor reserves the power of revocation * * *." Stipe v. First Nat. Bank of Portland, 208 Or. 251, 268, 301 P.2d 175 (1956); see also George Bogert, et al., The Law of Trusts and Trustees, §992 (3d ed 2006) ("At common law, the settlor had no power to modify the trust * * * if the settlor did not expressly reserve such power in the instrument."). "In determining the intent of the settlor, the court looks at the language used in the document, giving the language its ordinary meaning." In re Roman Catholic Archbishop, 345 B.R. 686, 697 (Bankr D Or. 2006) (citing ORS 42.250.)
The text of the trust document states that the trust would be revocable during the lifetime of both settlors, but after the death of the first settlor, the trust became irrevocable. Therefore, the court finds that when Ray Hannah died in 1999, the trust became irrevocable. The text of ORS 311.668(1)(c) is clear and unambiguous: the trust must be revocable for the subject property to be eligible for deferral. Accordingly, the court finds that Plaintiff does not meet the eligibility requirements of ORS 311.668(1)(c) because the subject property is not owned by "a trustee of an inter vivos trust that was created by and is revocable by an individual * * * who is otherwise eligible to claim deferral of taxes * * *." ORS 311.668(1)(c) (emphasis added). Thus, the Department properly "inactivated" Plaintiff's account.
The second issue before the court is whether the repayment provisions of ORS 311.684 were triggered when the trust became irrevocable. ORS 311.684 provides in relevant part:
(Emphasis added.)
"In interpreting a statute, the court's task is to discern the intent of the legislature." PGE v. Bureau of Labor Industries, 317 Or. 606, 610, 859 P.2d 1143 (1993). The legislative intent is determined first from the text and context of the statute. PGE, 317 Or. at 611; State v. Gaines, 346 Or. 160, 171, 206 P.3d 1042 (2009). "[W]ords of common usage typically should be given their plain, natural, and ordinary meaning." PGE, 317 Or. at 611. The court is mindful of the "statutory enjoinder not to insert what has been omitted, or to omit what has been inserted." Id. The court may consider legislative history where it "appears useful to the court analysis." Gaines, 346 Or. at 172.
OAR 150-311.684 makes clear the distinction between "disqualification" under ORS 311.684 and "inactivation":
OAR 150-311.684(4). By contrast, disqualification results when one of the triggering events in ORS 311.684 occurs-e.g. the applicant dies, the property is sold or transferred, or the property is no longer the homestead of the applicant. OAR 150-311.684(2). Disqualification causes the deferred taxes, fees, and interest to become due by August 15 of the following year. ORS 311.686(1)(b); OAR 150-311.684(2).
The legislative history of ORS 311.684 underscores that distinction. During a House Revenue Committee hearing, John Phillips (Phillips) from Department of Revenue testified that the usual procedure for collecting deferred taxes is that a lien for the amount of deferred taxes and estimated interest is placed on the property for each year that the deferral is claimed. Phillips testified that the lien is usually paid when the property is sold to a bona fide purchaser for value and stated that the payor is usually the title company who paid off the lienholders to clear title...
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