IN RE LANE COMPANY HICKORY CHAIR DIV.

• Decision Date: 17 September 2002
• Docket Number: No. COA01-1343.,COA01-1343.
• Citation: 571 S.E.2d 224,153 NC App. 119
• Court: North Carolina Court of Appeals
• Parties: In the Matter of Appeal of the LANE COMPANY-HICKORY CHAIR DIVISION from the Decision of the Catawba County Board of Equalization and Review Concerning Real Property Taxation for Tax Year 1999.

571 S.E.2d 224

153 NC App. 119

In the Matter of Appeal of the LANE COMPANY-HICKORY CHAIR DIVISION from the Decision of the Catawba County Board of Equalization and Review Concerning Real Property Taxation for Tax Year 1999.

No. COA01-1343.

Court of Appeals of North Carolina.

September 17, 2002.

Jerry E. Hess, Newton, for Catawba County/Appellant.

Bell, Davis & Pitt, P.A., by John A. Cocklereece, Jr., Winston-Salem, Stephen M. Russell and Kevin G. Williams, for Taxpayer/Appellee.

TYSON, Judge.

Catawba County appeals the Final Decision of the North Carolina Property Tax Commission ("Commission"), entered 11 June 2001 which valued the subject property at $2,020,000.00. We affirm the decision of the Commission.

I. Facts

A. Description of Property

The Lane Company ("Taxpayer") owns a multistory manufacturing facility of approximately 573,980 feet located on 10.54 acres in Catawba County.

The original facility was built in the 1920's. Multiple additions were made in the 1950's and 1960's, with one addition built as recently as 1980. The facility's use is devoted to the manufacturing of residential furniture products, one of the businesses of the taxpayer. The overall age of the building is estimated to be fifty years with a remaining life of fifteen to twenty years.

Testimony before the Commission tended to show that the overall condition of the building is physically poor due to cracked floors and walls and sags in the ceilings. The Commission found that the improvements are functionally obsolete due to ceiling heights and varying levels of the floors, and that certain areas of the building are not used for these reasons.

Catawba County assessed the property at a total value of $3,820,000; $3,360,900 for the improvements and $459,100 for the land for the year 1999. Taxpayer appealed the county's assessment of the property to the county board of equalization and review, and the board affirmed the county's value. At the hearing before the Commission, the county adjusted the total assessment to $3,459,500.

B. Valuation Procedures

Catawba County employs three appraisal methods including cost, income capitalization, and sales comparison to value property for assessment of ad valorem taxes. The county utilized the income approach to value the subject property with an initial assessment of $3,820,000. The income approach is used to measure the present worth of the future benefits of a property by the capitalization of a net income stream over the remaining economic life of the property. According to Billy E. Little ("Little"), a real estate appraiser employed by Catawba County and the county's expert at the hearing, the income capitalization approach is used to value 90-95% of all commercial property in Catawba County. The income method was applied to information supplied by the owners of manufacturing facilities who responded to a questionnaire. Six of the responders owned facilities containing more than 100,000 square feet of manufacturing space. Mr. Little testified that the county used 20 different property record cards while employing the income approach to consider the varying age and condition of this property.

James Marlow, MAI SGA ("Marlow"), qualified as an expert witness, and testified that use of the income capitalization method was improper to assess the value of the subject property. Marlow explained that the income method did not reflect the motivations of buyers and sellers of this type of property. Marlow further explained that the cost method was improper because of the substantial accrued depreciation, physical deterioration, and functional obsolescence associated with the building. Marlow testified that the sales comparison approach was the best method for valuing the subject property, as it is direct evidence of the marketplace and the subject property's position in the market. Marlow stated that the sales comparison approach was particularly appropriate here due to the facility being used by the owner.

The sales comparison approach compares the subject property with market data based upon an appropriate unit of comparison. Marlow's investigation of the subject property's value produced few local sales of properties. Marlow testified that the market for manufacturing facility property is regional in scope. Marlow cited eight representative sales, used these comparables with adjustments to determine the market value for the subject property, and opined the fair market value at $3.50 per square foot of building area. The Commission relied on Marlow's testimony to hold that Catawba County employed an arbitrary method of appraisal in reaching the assessed value. A divided Commission (3-2) valued the property at $2,020,000. Catawba County appeals.

II. Issues

Catawba County contends the Commission erred by (1) finding that the county employed an arbitrary method of valuation of the subject property and in deciding that the finding was supported by competent, material and substantial evidence, (2) failing to afford a presumption of correctness to the county's valuation of the subject property using the comparable sales method of assessment, (3) allowing Taxpayer to challenge the county's Schedule of Values during its appeal of the assessment of the subject property, and (4) finding that the true value of the subject property as of 1 January 1999, was two million twenty thousand dollars ($2,020,000).

III. Motion to Dismiss

Taxpayer moved to dismiss the county's appeal based on alleged violations of Rules 10 and 28 of the North Carolina Rules of Appellate Procedure. Rule 10 sets forth the requirements for assigning error on appeal and Rule 28 outlines the function and content of the appellate briefs. "[T]he appellant must except and assign error separately to each finding or conclusion that he or she contends is not supported by the evidence, then state which assignments support which questions in the brief." Concrete Service Corp. v. Investors Group, Inc., 79 N.C.App. 678, 684, 340 S.E.2d 755, 759-760 (1986).

Catawba County's assignments of error on appeal as found in the record are broad, vague, and unspecific. They allege the final decision of the Commission to be "[u]nsupported by competent, material and substantial evidence in view of the entire record ... and [a]ffected by other errors of law, to wit: failure to follow the mandate of clearly applicable and controlling decisions of the North Carolina Supreme Court and Court of Appeals."

These assignments of error do not comply with the North Carolina Rules of Appellate Procedure: "[e]ach assignment of error shall, so far as practicable, be confined to a single issue of law; and shall state plainly, concisely and without argumentation the legal basis upon which error is assigned." N.C. R.App. P. 10(c)(1). "A single assignment generally challenging the sufficiency of the evidence to support numerous findings of fact, as here, is broadside and ineffective." Wade v. Wade, 72 N.C.App. 372, 375-76, 325 S.E.2d 260, 266 (1985).

Here, the assignments of error contend four separate and distinct errors in two general assignments of error (one as to the facts and the other as to the conclusions of law) in violation of the rule.

The Rules of Appellate Procedure are designed to expedite appellate review. Catawba County's failure to observe the requirements of the Rules subjects their appeal to dismissal. See Bowen v. N.C. Dep't. of Health and Human Servs., 135 N.C.App. 122, 519 S.E.2d 60 (1999); N.C. R.App. P. 25(b), 34(b)(1). Nevertheless, we will consider the arguments pursuant to N.C. R.App. P. 2. Taxpayer's motion to dismiss is denied.

IV. Standard of Review

Our standard of review of a decision of the Commission is the "whole record" test. See N.C.G.S. § 105-345(d), N.C.G.S. § 7A-29 (2001). The reviewing court is not allowed to substitute its own judgment in place of the Commission's judgment even where there are two reasonably conflicting views. Rainbow Springs Partnership v. County of Macon, 79 N.C.App. 335, 341, 339 S.E.2d 681, 684 (1986). A reviewing court must determine whether the decision of the Commission is supported by substantial evidence when using the whole record test. Id. at 341, 339 S.E.2d at 685.

" `Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.' " Id. at 341, 339 S.E.2d at 685 (quoting Thompson v. Board of Education, 292 N.C. 406, 414, 233 S.E.2d 538, 544 (1977) (citations omitted)). "[T]he credibility of the witnesses and resolution of conflicting testimony is a matter for the administrative agency to determine." In re Appeal of General Tire, 102 N.C.App. 38, 40, 401 S.E.2d 391, 393 (1991) (citing Comr. of Insurance v. Rate Bureau, 300 N.C. 381, 406, 269 S.E.2d 547, 565, reh'g denied, 301 N.C. 107, 273 S.E.2d 300-01 (1980)). If the Commission's decision is supported by substantial evidence, this Court must affirm the Commission's decision. Rainbow Springs, 79 N.C.App. at 343, 339 S.E.2d at 686.

V. Sufficiency of Evidence

Catawba County contends that the Commission erred in finding that the county employed an arbitrary method of valuation as unsupported by competent, material and substantial evidence in the entire record. The county asserts there is a lack of substantial evidence because there are no findings of fact supporting the decision of arbitrariness in the final decision. Secondly, the county relies on its schedule of values to show the assessment is not arbitrary. We disagree.

The Commission made clear findings of fact that it gave greater weight to the testimony of Marlow than to Little. The Commission found that the county's assessment did not reflect the "true value" of the property. "True value" is defined as "market value":

[T]hat is, the price estimated in terms of money at which the property would change hands between a willing and financially able buyer and a willing seller, neither being under any compulsion to buy or to

...