Healthsouth Corp. v. Boulder County Com'Rs

• Decision Date: 19 March 2009
• Docket Number: No. 08CA0233.,08CA0233.
• Citation: 220 P.3d 966
• Parties: HEALTHSOUTH CORPORATION, Petitioner-Appellant, v. BOULDER COUNTY BOARD OF COMMISSIONERS, Respondent-Appellee, and Colorado State Board of Assessment Appeals, Appellee.
• Court: Colorado Court of Appeals

220 P.3d 966

HEALTHSOUTH CORPORATION, Petitioner-Appellant, v. BOULDER COUNTY BOARD OF COMMISSIONERS, Respondent-Appellee, and Colorado State Board of Assessment Appeals, Appellee.

No. 08CA0233.

Colorado Court of Appeals, Div. V.

March 19, 2009.

N.H. Wright & Associates, LLC, Norman H. Wright, Greenwood Village, Colorado, for Petitioner-Appellant.

H. Lawrence Hoyt, County Attorney, Michael A. Koertje, Assistant County Attorney, Boulder, Colorado, for Respondent-Appellee.

John W. Suthers, Attorney General, Roxane D. Baca, Senior Assistant Attorney General, Lisa R. Brenner Freimann, Assistant Attorney General, Denver, Colorado, for Appellee.

Opinion by Judge GRAHAM.

In this property tax case, petitioner, HealthSouth Corporation (taxpayer), appeals from a final order of the Board of Assessment Appeals (BAA). The BAA dismissed taxpayer's consolidated administrative appeals challenging the denial by respondent, the Boulder County Board of County Commissioners (BOCC), of two petitions seeking an abatement and refund of a portion of taxpayer's personal property taxes for the 2002 tax year. We reverse the BAA's order and remand for further proceedings on the merits of taxpayer's abatement and refund claims.

The statutory grounds for an abatement and refund of all or part of property taxes levied are provided in section 39-10-114(1)(a)(I)(A), C.R.S.2008, which authorizes an abatement and refund of property taxes levied "erroneously or illegally," whether due to (1) "erroneous valuation for assessment"; (2) "irregularity in levying"; (3) "clerical error"; or (4) "overvaluation."

At issue in this appeal is whether, under the Colorado property tax scheme, a taxpayer may seek an abatement and refund of overpaid personal property taxes when the overpayment resulted from the taxpayer's earlier misconduct in overreporting assets and valuations in filing its personal property declaration schedules. Contrary to the BAA's ruling, we conclude that, under the statutory scheme, taxpayer has the right to proceed with its abatement and refund claims on the ground of overvaluation, notwithstanding the fraudulent overstatement of its assets and valuations in its initial tax filings. Consequently, the BAA erred in dismissing taxpayer's appeals without affording an evidentiary hearing, and on remand it must consider the merits of taxpayer's overvaluation claims concerning its personal property for the 2002 tax year.

I. Factual Background

The facts relevant to the legal issues before us are not in dispute. Taxpayer timely filed two abatement and refund petitions with the BOCC concerning the taxes levied on its personal property for the 2002 tax year. After the BOCC denied these petitions, taxpayer timely appealed these decisions to the BAA. The BAA later consolidated these appeals.

In the BAA proceedings, taxpayer sought to reduce the 2002 tax year valuation of its personal property at its Longmont location from $654,642 to $125,517, and to reduce the 2002 tax year valuation of its personal property at its Boulder location from $471,060 to $60,312. The factual basis for taxpayer's abatement and refund claims is that in 2002, as part of a broader fraudulent scheme to increase the company's stock price, taxpayer included fabricated valuations for fictitious assets in the personal property declaration schedules it filed.

Taxpayer, through its independent accountants, disclosed the existence of this scheme to the BOCC in a letter which enclosed a copy of a complaint which had been filed against taxpayer by the Securities and Exchange Commission. The complaint alleged that taxpayer had inflated its earnings to match projections of certain Wall Street analysts and thereafter balanced its books by matching false earnings with false increases in its tangible assets. According to the complaint, taxpayer "engaged in transactions, practices and a course of business which would have operated as a fraud or deceit upon the purchasers of the securities." Now under different management, taxpayer sought an abatement and refund of the portion of the personal property taxes it overpaid attributable to the reported valuations of the nonexistent assets.

The BOCC moved to dismiss taxpayer's appeals, contending that taxpayer's fraud in its personal property tax filings provided no basis for abatement and refund claims under any of the statutory grounds. The BOCC alternatively argued that even if there were any viable statutory grounds for relief under these circumstances, taxpayer's abatement and refund claims should be barred by certain equitable defenses, including the "unclean hands" doctrine.

After considering this motion, taxpayer's response, the BOCC's reply, briefs by the parties, and oral argument at an evidentiary hearing on the issues, the BAA granted the BOCC's motion and dismissed taxpayer's appeals.

As we read the BAA's order, it did not dismiss for lack of jurisdiction. Rather, the BAA ruled that there were no statutory grounds authorizing an abatement and refund under the circumstances stated by taxpayer. Specifically, the BAA ruled that under these circumstances taxpayer's abatement and refund claims were not based on any erroneous valuation for assessment, any clerical error, or any overvaluation within the meaning of these statutory provisions. This appeal followed.

II. Legal Analysis

We agree with taxpayer that the BAA erred in dismissing its abatement and refund claims under these circumstances. In our view, taxpayer had a viable basis for its abatement and refund claims under the statutory scheme on the ground of overvaluation, to the extent that taxpayer could prove that its personal property was overvalued by the inclusion of any value attributable to nonexistent assets. We also perceive no basis under the statutory scheme for barring these authorized abatement and refund claims under the equitable defenses asserted by the BOCC.

A. Jurisdictional Issues

We first address the parties' arguments concerning the BAA's jurisdiction to consider taxpayer's abatement and refund claims. As noted by taxpayer, because the administrative appeals from the BOCC's actions denying taxpayer's petitions were timely filed with the BAA, the BAA had jurisdiction and a statutory duty to "hear" taxpayer's appeals. See §§ 39-2-125(1)(f), 39-10-114.5(1), C.R.S. 2008; 5050 S. Broadway Corp. v. Arapahoe County Bd. of Comm'rs, 815 P.2d 966, 968-69 (Colo.App.1991).

In such administrative appeals, the BAA is not limited to a review of any previous action taken, but instead is authorized to conduct de novo evidentiary proceedings on the merits of the abatement and refund claims. See D.C. Burns Realty & Trust v. Jefferson County Bd. of County Comm'rs, 849 P.2d 900, 903 (Colo.App.1992). Nevertheless, even when the BAA has subject matter jurisdiction to hear such appeals, the substantive limitations on abatement and refund claims found in other statutory provisions remain applicable. See 5050 S. Broadway Corp., 815 P.2d at 968-71 (holding that BAA had jurisdiction to hear the appeal, but affirming BAA's denial of abatement and refund claims as unauthorized under statutory scheme).

Here, the BAA stated that it had "heard" taxpayer's appeals, but it ultimately dismissed them upon ruling that taxpayer's abatement and refund claims did not fall within the substantive grounds for such relief under the statutory scheme. Thus, the BAA's order was not based on any jurisdictional issues, and we perceive no error on any jurisdictional grounds.

B. Overvaluation Issues

Next, contrary to the BOCC's argument and the BAA's analysis, we agree with taxpayer that it asserted viable abatement and refund claims under the circumstances here based on the statutory provisions authorizing such claims on the ground of "overvaluation."

We review interpretations of statutes by the BAA de novo. Our primary purpose when construing statutes is to effectuate the intent of the General Assembly. To determine intent, we first look to the statutory language, giving words and phrases their commonly accepted meaning. Boulder Country Club v. Boulder County Bd. of Comm'rs, 97 P.3d 119, 120 (Colo.App.2003).

The term "overvaluation" is not defined in section 39-10-114(1)(a)(I)(A), but it must be given a broad meaning. See ch. 309, sec. 1, § 39-10-114(1)(a)(I)(A), 1991 Colo. Sess. Laws 1962 (legislative declaration stating that this ground was added to the statutory scheme "with the intent of extending to any taxpayer the right to petition for an abatement or refund of property taxes levied erroneously or illegally due to an overvaluation," which allows abatement and refund petitions "for essentially all errors in valuation"); see also Portofino Corp. v. Bd. of Assessment Appeals, 820 P.2d 1157, 1160 (Colo.App.1991) (noting and applying this legislative declaration).

The determination as to the statutory grounds applicable to a taxpayer's abatement and refund claims is based on the substance of the taxpayer's claims, and the language used in the taxpayer's petition is not controlling. When the taxpayer's abatement and refund claims involve a factual determination concerning the appropriate valuation, they are based on the ground of overvaluation. See Boulder Country Club, 97 P.3d at 122-23; Wyler/Pebble Creek Ranch v. Colo. Bd. of Assessment Appeals, 883 P.2d 597, 600 (Colo. App.1994); see also 2 Assessors Reference Library § V, at 5.14 (rev. Sept.2008) (provisions of Property Tax Administrator's reference manuals stating that "overvaluation" under section 39-10-114(1)(a)(I)(A) is defined as "valuation adjustments that require judgment").

Here, taxpayer's abatement and refund claims are factually based on its inclusion of fictitious values of nonexistent assets in the personal property declaration schedules it initially filed. Although the personal property taxes levied were based on the assets and values taxpayer reported, the county had the legal authority to value and tax only...